The cryptocurrency market capitalization experienced the steepest decline of the year, falling by 7%. This substantial fall was triggered by an 8% slide in bitcoin (BTC) over the last 24 hours, which has reversed weekly gains and led immediately to a decline across the market.
Although Bitcoin peaked at $73,000 on Thursday, its value plummeted to $65,800 early Friday and now is experiencing a slight recovery.
Among the other cryptocurrencies that lost value were Ether (ETH), smart contract network Cardano’s ADA, BNB chain’s BNB, and the cross-border payment network providers XRP. Dogecoin (DOGE) amounted to 13% down and Shiba Inu (SHIB) as well underwent 27% down.
Unlike all the other major tokens, SOL from Solana was the only coin that gained, by 1% since Thursday.
The sales pressure in the morning hours of the U.S. trade hours commenced when the Producer Price Index (PPI) recording a 0.6% surge in prices was released. This figure doubled the expansion rate that was experienced in January and exceeded the expectancy of the economists, thus reducing the chances of a potential rate decrease in May.
According to the data, cryptocurrency-based futures reporting losses of over $800 million showed the second-highest loss recorded in 2020. Sell-offs, involving liquidations totaling $660 million, were the consequence, which most probably fueled the significantly strong downturn.
Liquidation happens when the trade is notified via the exchange that its leveraged position has been closed due to a partial or total loss of the initial margin.
However, some traders have warned of the possibility of further losses at the onset of the week and then a potential price recovery afterward.
According to Alex Kuptsikevich, Senior Market Analyst at FxPro, “New historical highs are a selling trigger.” He further explained,
“Some positions are being taken, raising the question of whether there will be sufficient demand at current levels or if most will wait for a more pronounced correction.”
Kuptsikevich elaborated that:
“In a scenario of correction the most important levels are between $65,000 to $65,500 and $60,000 to $60,500whi ch stands for strong round figures attention of retail traders and also lines of Fibonacci retracement in 76.4% and 61.8%,”
Fibonacci retracement is a technical instrument that helps to predict where price may find support as well as areas of resistance.
